Thursday, April 29, 2010

Obamacare faces first big test Friday

Tomorrow is the deadline for states to inform the federal government whether they intend to participate in one of the first programs of Obamacare, federally-funded high risk pools for the uninsured.  In an op-ed piece in the Wall Street Journal today, Grace-Marie Turner illuminates how the program will punish the states and the high risk patients that have acted responsibly in advance of the new law (via IBD):
But what's most disconcerting is that the program will likely disturb the careful balance that some 35 states have struck in setting up their own high-risk pools. The federal high-risk pools would operate alongside existing state pools. States will be required to maintain funding for their pools, even while the federal government signs up new uninsured people for its program. The federal program will have more generous benefits and lower premiums than most state-funded high-risk programs, even though state officials say people in the new federal program are likely to be less needy than those enrolled in existing state risk pools.
According to USA Today, about 200,000 people with pre-existing conditions will not be eligible for the federal high-risk insurance coverage because they already buy state-run plans:
The nation's new health law creates a far cheaper insurance program opening July 1 for people with pre-exisiting medical conditions. To qualify, a person can't have had health coverage for six months.

The result is it excludes people already enrolled in 35 state high risk pools offering insurance of last resort. The state pools charge high premiums — often double standard rates for healthier people in the individual market — to help cover costs.
Last week Richard Foster, chief actuary of the Centers for Medicare and Medicaid Services, reported  that the high-risk program will run out of money next year or in 2012 even though it is mandated to bridge coverage for these high risk people until 2014.  This would almost certainly create unfunded mandates for states that are already facing daunting budget challenges.  Georgia, Nebraska, Nevada, and Louisiana have already said they are out.

Ms. Turner concludes:
If more states opt not to join the federal program, Congress will have to acknowledge that there has been a public repudiation of the federal program. That could create pressure to give states what they want—block grants to increase their existing high-risk pools or, for states that don't have them, money to set up new ones. Deciding whether to sign up for the high-risk program is an important early test for states to tell Washington who is in charge.

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